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Gala2k [10]
3 years ago
5

LO 2.2Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit,

what are their fixed costs?
$240,000
$200,000
$260,000
Their fixed costs cannot be determined from the information presented.
Business
2 answers:
Nimfa-mama [501]3 years ago
4 0

Answer:

Option (B) is correct.

Explanation:

Given that,

Total costs for ABC Distributing = $250,000

Activity level = 10,000 units

Variable costs are $5 per unit

Therefore, the fixed cost is calculated as follows:

Total cost = Variable cost + Fixed cost

$250,000 = (10,000 × $5 per unit) + Fixed cost

Fixed cost = $250,000 - $50,000

                 = $200,000

kogti [31]3 years ago
4 0

Answer:

$200,000

Explanation:

The computation is shown below:

Total cost = Fixed cost + variable cost

where,

Total cost = $250,000

And, the variable cost is

= Activity level × variable cost per unit

= 10,000 units × $5

= $50,000

So, the fixed cost would be

$250,000 = Fixed cost + $50,000

The fixed cost is

= $250,000 - $50,000

= $200,000

The total cost is a combination of the variable cost and the fixed cost

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